SHINEWING HONG KONG
HKSAR
Budget Summary
2016 - 2017
www.shinewing.hk(24 February 2016)
Tax Highlights
Reducing profits tax for 2015-16 by 75%, subject to a ceiling of $20,000
The 2016-17 HKSAR Budget speech was delivered earlier today.
As expected publicly and in view of the forecast budget surplus for 2015-16, various one-off relief measures have been proposed in the contexts of tax reduction, waiver of business registration fees, waiver of rates, and increment of allowances in specific scopes. These sets of tax and short term relief measures will cost $38.8 billion in total and should alleviate the financial burden on the public in different sectors, and stimulate the economy as a whole (boosting GDP for 2016 by 1.1% as estimated in the Budget).
Mr. John Tsang Chun Wah, GBM, JP, the Financial Secretary of the HKSAR Government emphasized in the Budget speech that relief measures are different from recurrent expenditure, and are subject to adjustment in light of the economic and financial position of the year. Yet the persistent pattern in proposing these measures in current and consecutive prior years has generated common expectation in the economy every year. Elasticity in scaling down the relief measures shall become more critical in future.
Several tax amendments are being formulated or finalized in accordance to the Budget. These include tabling a bill into Legislative Council regarding interest deductions under profits tax for intra-group financing business and reduction of profits tax of qualifying corporate treasury centres, as well as
Profits Tax
Reducing salaries tax and tax under personal assessment for 2015-16 by 75%, subject to a ceiling of $20,000 Raising the basic allowance and the single parent allowance from $120,000 to $132,000
Raising the married person's allowance from $240,000 to $264,000
Increasing allowances for maintaining a dependent parent or grandparent from $20,000 to $23,000 (aged
Salaries Tax
the purchase of intellectual properties rights shall also be expanded from 5 categories to 8. In addition, the use of tax concession to boost aircraft leasing business and explore business opportunity in aerospace financing shall be examined accordingly. It has been emphasized repeatedly in the Budget speech that our society is ageing, and has far-reaching implications for our future public finance. Concurrently the Budget also stressed the avoidance on over reliance on 1 or 2 types of tax as the source of tax revenue. In line with the up-coming long-term financial burden derived from the ageing problem and the patchy tax revenue, we encourage the HKSAR Government to revisit the narrowness of our tax base, and the essentiality of broadening the tax base in order to stabilize the government revenue in the long run.
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2016-17 HKSAR Budget
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The following summarize other key points mentioned in the budget speech (other than tax as previously highlighted) for easy reference:
Rates
Waive of rates for four quarters of 2016-17, subject to a ceiling of $1,000 per quarter for each rateable property
Comprehensive Social Security Assistance (“CSSA”)
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Provision of extra allowance to CSSA recipients, equal to 1 month of the standard rate CSSA payments, OldAge Allowance, Old Age Living Allowance or Disability Allowance
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Helping Small and Medium Enterprises (“SME”)
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Extend the application period for the "special concessionary measures" under the "SME Financing Guarantee Scheme" to 28 February 2017, reduce the annual guarantee fee rate by 10% and remove the minimum guarantee feeWaive the business registration fees for 2016-17
For the enhancement of the long-term competitiveness of SME, a Pilot Technology Voucher Programme under the Innovation and Technology Fund (ITF) will be launched to subsidise their use of technological services and solutions to improve productivity and upgrade or transform business processes. The 3-year pilot programme will provide, on a matching basis, a maximum subsidy of $200,000 for each eligible SME
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Supporting Tourism
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Waiver of licence fees for travel agents, hotels and guesthouses and restaurants and hawkers and fees forrestricted food permits for 1 year
Allocate $240 million for Government and the industry to jointly launch several measures to enhance Hong Kong's attractiveness and competitiveness
Upgrade our tourism infrastructure and embark on a pilot scheme on food trucks this year
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Nurturing Innovation
Earmark $500 million to set up an Innovation and Technology Fund for Better Living to encourage different sectors to apply innovation and technology to improve the quality of living
Allocate an additional $200 million to install traffic detectors along some strategic routes to provide the public with more real-time traffic information and enhance transport efficiency
For bringing greater convenience to our citizens and tourists, $500 million will be earmarked to further increase the number of Wi-Fi.HK hotspots to over 30, 000
Inject $2 billion to launch a Midstream Research Programme for Universities to provide funding support for universities to carry out more midstream and applied research projects in key technology areas
Increase the level of cash rebate under the R&D Cash Rebate Scheme to 40% to encourage private enterprises, SME in particular, to put more resources into R&D works
Extend the scheme that provides funding support for the technology transfer work of 6 universities by 3 years to 2018-19
Set up a $2 billion Innovation and Technology Venture Fund to co-invest with private venture capital funds on a matching basis in local technology start-ups
Inject an additional $20 million into the Film Development Fund (FDF) to subsidise the expenses incurred by locally-produced Cantonese films for distribution and publicity conducted in the Mainland
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Business and Professional Services
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For the facilitation of trade in goods, establish a "single window" for "one-stop" lodging of all the 50-plus trade documents and submissions with Government for trade declaration and customs clearance purpose•
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Financial Services
Follow up the implementation recommendation from Steering Group on Financial Technologies to promote Fintech
Seize the opportunity to issue the third sukuk issuances by Government in a timely manner Increase investment quota for the RMB Qualified Foreign Institutional Investors Scheme
Discuss with the relevant authorities of the Central Government the launch of the Shenzhen-Hong Kong Stock Connect and enhancement of the Shanghai-Hong Kong Stock Connect
Review the listing regulatory regimes, streamline procedures and enhance market efficiency and quality to reinforce Hong Kong's status as the premier capital formation centre
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Care for People
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Following the existing practice, iBond issue of up to $10 billion with a maturity of 3 years will be launched Set aside a dedicated provision of $200 billion for a 10-year hospital development plan to enable the Hospital Authority to expand and upgrade healthcare facilities in a more flexible and long-term manner to cope with an ageing populationAllocate $10 billion to Hospital Authority to set up an endowment fund to generate investment returns for enhancing public-private partnership programmes
Provide a loan of $4 billion to the Chinese University of Hong Kong for developing a non-profit making private hospital
Launch a pilot scheme to issue Silver Bond this year and next year, targeting at Hong Kong residents aged 65 or above, with a maturity of 3 years for the first issuance
Allocate a recurrent provision of $180 million to strengthen various residential care services, special transport services and community support services for persons with disabilities, and to provide support services for children with special needs and their families
Stabilizing Land Supply
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29 residential sites to be included in the Land Sale Programme, of which 14 are new sites 8 commercial/business sites and 3 hotel sites to be included in the Land Sale ProgrammeReprovision government facilities in the 2 action areas in Kwun Tong and Kowloon Bay, convert the Murray Road multi-storey car park to commercial use and redevelop the Queensway Plaza site
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Public Finances
Establish the Future Fund and allocate $220 billion from the balance of the Land Fund, which is part of the fiscal reserves, as an initial endowment of the Future Fund, and to inject 1/3 of the actual surplus in 2015-16 into the Future Fund for long-term investments to tackle the problems that come with an anticipated structural deficit
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Manpower Training
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Offer more internship and exchange opportunities to students and encourage the workforce to pursue continuing education, developing a good mix of generalists and professionals in Hong KongImplement a pilot scheme to provide tuition fee subsidy for 3 cohorts of students admitted to designated professional part-time programmes offered by the Vocational Training Council starting from the next academic year to further encourage continuing education
Budget Summary – Hong Kong 2016-17 - - - - - - - - - - -
Budget Summary – Hong Kong 2016-17 - - - - - - - -
Budget Summary – Hong Kong 2016-17
(Source: The 2016-17 Budget Speech)
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The aim of this summary is to alert taxpayers on the recent developments. The information is general in nature and should not be taken as a substitute for specific advice. Accordingly, SHINEWING Tax and Business Advisory Limited accepts no responsibility for any loss that occurs to any party who acts on information contained herein without further consultation with us.
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